Homeowners can breathe a collective sigh of relief.
The federal takeover of two mortgage giants won't hurt existing home loans, local experts say.
For first-time buyers, it might even help.
But the groups most likely to be grumbling aretaxpayers -- and stockholders who still have a stake in Fannie Mae and Freddie Mac.
The Bush administration announced Sunday the government would take charge of the companies to avert financial disaster.
Jeffrey S. Berquist, GRI, broker owner of Prudential Stadtmiller Realty, compared the situation to a ship captain dodging an iceberg at the last minute.
He said the two publicly-traded companies, which together own or guarantee about half the nation's home loans, each added fees that increased the cost of lending.
"What I think you're going to see now is some of these charges will either come down or be completely eliminated," said Berquist, who also serves as a real estate instructor at Ohio Business College.
"You'll see a narrowing of the spread (the difference between 30-year fixed mortgage rates and 10-year treasury yields)."
Berquist predicts this will take the now6.5-percent mortgage rates down to less than6 percent. That change could theoretically allow half amillion more people to buy homes -- which would help dry up the housing surplus and stabilize the market, he said.
Loan regulations are now tighter because of the housing crisis, so the available homes will likely go to those in a better position to afford them.
The bail-out places Fannie and Freddie into a government conservatorship run by the Federal Housing Finance Agency, the new agency Congress created this summer to regulate them. That move could cost taxpayers billions of dollars because of the companies' potential liabilities, though it's not clear how much.
But Treasury Secretary Henry Paulson told media outlets that the financial impact if both companies failed would be far more serious. The two bulk-buyers of mortgages lost $14 billion in the last year and are likely to lose billions more until the housing market begins to recover, according to Associated Press reports.
Cummings Mortgage Services owner Dan Cummings said he was one of the first in the area to sell loans to Fannie and Freddie in 1970 -- which enabled him to charge lower rates to his borrowers.
Though he was "saddened" by their failure, he said local residents shouldn't be alarmed.
"Having the government back (Fannie and Freddie) helps the loan rate a little for those who are first-time buyers or want to refinance," he said. "But I think it's more of a job market situation -- our market won't improve until our overall economy improves."
For stockholders, however, the situation remains bleak.
Patrick Murray, senior vice president of Smith Barney financial advisors, said the common stock of the two companies will be worthless, and its preferred stock will trade with no dividend. Stock that hit highs of nearly $70 per share earlier this year opened Monday at $1.91, according to the New York Stock Exchange.
Murray said the bailout won't hurt the housing market, but it isn't likely to help it, either.
"What (the government) is doing, essentially, is giving these guys cheap money," he said. "It's pretty ugly. There's an excess supply of homes, so qualified buyers can get houses at good prices, but the problem is banks are not extending liquidity."
Even after the government dismissed the two companies' chief executives, some say those leaders could still gain millions in severance pay and retirement benefits.
A New York Times article stated that Fannie Mae chief Daniel H. Mudd stands to gain as much as $9.3 million, while Freddie Mac's departing head Richard Syron could receive an exit package of at least $14.1 million.